The Company is a provider of modular enterprise-class data storage solutions and storage process technology. It designs, develops and manufactures enabling technology that provides its customers with data storage products.
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As hard drive builders Seagate Technology (NYSE: STX) and Western Digital (NYSE: WDC) have shown, it's nigh-on impossible for storage experts to get any respect in this market.Whether the market eventually corrects this obvious imbalance between business strength and market cap or one of the big boys decide to buy out this industry-wide parts provider, loading up on Xyratex today seems nearly guaranteed to produce nice returns.
The problem Xyratex and others face is smartphones and tablets, which are taking shares from PCs. They don't use hard drives. Server farms and the cloud will grow in the coming years, but here is the catch......
1. I have a Terrabyte hard drive...I'm using 300 GB...after over a year of use....in other words my utilization is 30%
2. Cloud server farms run at 70% to 80% utilization
Result...one hard drive sold will now satisfy two end users....the market is cut in half and sales and production are reflecting this.